HDHP enrollment reaches more than 50% of American private-sector workers

More than half of private sector workers in the U.S. are enrolled in high-deductible health plans (HDHPs) a new study has found. The report by ValuePenguin, a division of LendingTree, also found the number of private sector workers enrolled in HDHPs rose in 2021 for the eighth-straight year.

The report, posted at the ValuePenguin website, notes that HDHPs might be a good value for some Americans, but for lower-income workers who have chronic conditions and whose employers don’t also provide health savings plan contributions, HDHPs can become very expensive, and research has found that HDHPs can lead workers to skip or delay health care due to cost concerns.

A record-high number

The report says that more than 55% of Americans were enrolled in HDHPs in 2021, a new record. The rate rose from 30.3% in 2013 (the lowest enrollment in the 10 years studied) to 55.7% in 2021, an 83.7% increase.

Much of the rise is attributed to increase health care costs, according to experts. “With health insurance costs rising over the years, it’s not surprising that HDHPs are growing in popularity,” says Divya Sangameshwar, a ValuePenguin health insurance expert. She adds that many employers might prefer HDHPs over traditional preferred provider organizations (PPOs) and health maintenance organizations (HMOs), as they have lower premium costs.

The plans were designed to reduce unnecessary health care spending and encourage enrollees to become smarter consumers of health care. Many plans include a savings option such as a health savings account (HSA), or a health reimbursement arrangement (HRA). However, many consumers don’t have the information needed or cheaper options available, and HDHPs have been linked to bad outcomes when enrollees have skipped or delayed care because of affordability issues.

HDHP adoption varies widely by state

The report found that in some states, HDHP enrollment is much higher than in others. Maine has the highest rate of HDHP enrollment, at 76.2%, followed by Tennessee (68.7%) and Nebraska (67.6%).

Some states have much lower HDHP enrollment. Hawaii has the lowest at 11.6%, followed by the District of Columbia (28.4%), and Alaska (42.4%). ‘’

“Varying state laws on employer-sponsored health care plans can contribute to why some states such as Hawaii have low HDHP enrollment,” the report says. “According to a 2022 analysis from Becker’s Payer Issues, the passing of the Prepaid Health Care Act in 1974 in Hawaii led to the creation of an employer mandate for medical insurance coverage. This law also blocked employer efforts to save money — including the implementation of HDHPs.”

The data also shows that some states have seen substantial increases in the number of private-sector workers enrolled in HDHPs. For example the percentage in Arkansas jumped from 36.1% in 2017 to 58% in 2021. In Louisiana, the percentage of private sector workers rose from 39.3% to 61.8% in that same time period; New Jersey saw a jump from 35.5% to 51.6%.

What population does the model fit the best?

The ValuePenguin report included an outline of which workers should and shouldn’t consider an HDHP plan.

It notes that those in generally good health are an especially good fit for HDHPs, and that they may see a financial benefit from that type of plan, since their premiums will be lower. Those who have HSAs or HRAs can also do well with HDHPs, with the savings plans helping to set aside extra money for health services. And those who have enough income to afford higher deductibles should be able to navigate the model. The HDHP model can be seen as a trade-off: lower premiums make the plan more affordable if the enrollee is generally healthy and makes good lifestyle choices.

Related: Spending bill extends telehealth coverage for HDHPs through 2024

Those who shouldn’t consider an HDHP include those who cannot afford high deductibles, workers whose employers don’t contribute to an HSA or HRA, and those with chronic conditions. Sangameshwar says that HDHP plans are not a good idea if enrollees suffer from illnesses requiring regular care. “You’ll need to pay your entire deductible out of pocket before you can get covered, making it extremely expensive to seek the life-saving care you need,” she says. “It makes no sense to opt for a cheaper plan only to pay thousands of dollars more for care.”